While trading volume has remained feverish across subsectors like artificial intelligence (AI), semiconductors, and tech megacaps, another corner of the market is quietly gaining momentum — energy.
In the latest Market on Close livestream, co-hosts “Twitter Tom” and Senior Market Strategist John Rowland, CMT, discussed one of the market’s most overlooked opportunities: the energy sector. From refiners to natural gas producers, John breaks down why this space could be gearing up for a rally — and which stocks are catching his eye.
“There’s always a bull market somewhere,” Tom said. “And right now, I think it might be energy.”
Why Energy Is Back on the Radar
Despite being one of the worst-performing sectors earlier this year, energy has recently shown signs of life. John pointed to data from Barchart’s Sector Performance page, noting that about 64% of energy stocks are now above their key moving averages — a bullish signal for renewed sector strength.
“The market is always rotating,” John explained. “When we get near a market top, one of the sectors that tends to take leadership is energy.”
Even with some red on the year-to-date charts, the 3-month performance trend shows momentum building — particularly among refiners and natural gas names.
Energy Stocks on John’s Watchlist
Here’s a breakdown of the energy names John highlighted during the show:
- EQT Corporation (EQT) – A leading natural gas producer and one of John’s largest holdings. “I’m still positive on this one,” he said, “but I’m getting close to locking in profits — maybe by selling calls near $60.”
- Halliburton (HAL) – An oilfield services leader that tends to outperform as drilling and production ramp up.
- Coterra Energy (CTRA) – Another strong natural gas play with favorable fundamentals.
- Valero Energy (VLO) – A top refiner benefiting from low distillate (diesel and heating oil) inventories and strong margins.
These companies, John noted, are showing strong technical setups alongside supportive macro trends.
The Refiners’ Advantage: Low Supply, Strong Margins
John pulled up an EIA inventory chart showing distillate fuel (diesel and heating oil) inventories at the low end of their five-year range. Low supply means refiners like Valero are in a prime position.
“That’s good news for refiners,” John said. “When inventories are low and crude input costs are soft, it widens the ‘crack spread’ — the profit margin between crude oil prices and refined products.”
John adds that although the heating oil crack chart currently shows overbought conditions, it also provides a better depiction of the improving refinery margins trend – now the widest since the fall of 2023.
With refining margins looking strong, it could push stocks like Valero higher into the winter heating season.
The Technical Picture: Valero’s Cup and Handle Setup
On Valero’s chart, John spotted a classic cup and handle pattern, one of the most reliable bullish continuation formations in technical analysis.
“If we measure this setup with an Average True Range (ATR) of about $5, we’d want to see a breakout move of roughly $7.50 above resistance,” he explained.
That would project a potential price target near $200, assuming continued strength in demand and favorable refining spreads.
How to Trade the Energy Sector on Barchart
Whether you’re looking for long-term investments or short-term trades, Barchart has powerful tools to help you research and monitor the energy space:
- Energy Sector Performance Page → Track sector highs and lows, stocks above key moving averages, and screen for top & bottom performers.
- Top Oil Stocks Watchlist → Track energy names by relative performance, technical signals, fundamentals, and more.
- Valero (VLO) Technical Analysis → Analyze moving averages, plus key technical indicators like RSI and ATR.
The Bottom Line
Energy may not be as flashy as AI, but as John put it, “crude oil is still the transportation fuel of the world.”
With tightening inventories, strong refining margins, and improving technical trends, the sector could be setting up for a powerful seasonal move into year-end.
Watch the Clip: Digging for Trades in the Energy Sector
- Stream the Full Episode of Market on Close
- Learn More About the Cup and Handle Pattern
- Explore Oil Stocks and Sector Performance on Barchart
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
- Does the Upcoming SoFi USD Crypto Launch Make SOFI Stock a Buy, Sell, or Hold?
- This Canadian Dividend Stock Just Hit New All-Time Highs
- These 2 Stocks Are Flashing Bright Red Warning Signs on the Charts… Plus 1 Stock That Looks Primed to Keep Breaking Out
- Can Xpeng Motors Eat Tesla’s Lunch in Humanoid Robots the Way BYD Did in EVs?
